Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/129364
Authors: 
Ertaç, Seda
Koçkesen, Levent
Özdemir, Duygu
Year of Publication: 
2015
Series/Report no.: 
Koç University-TÜSİAD Economic Research Forum Working Paper Series 1524
Abstract: 
We theoretically and experimentally analyze the role of verifiability and privacy in strategic performance feedback using a 'one principal-two agent' context with real effort. We confirm the theoretical prediction that information transmission occurs only in verifiable feedbackmechanisms and private-verifiable feedback is the most informative mechanism. Yet, subjects also exhibit some behavior that cannot be explained by our baseline model, such as telling the truth even when this will definitely hurt them, interpreting 'no feedback' more optimistically than they should, and being influenced by feedback given to the other agent. We show that a model with individual-specific lying costs and naive agents can account for some, but not all, of these findings. We conclude that in addition to being naive, some agents also suffer from self-serving biases and engage in non-Bayesian social comparisons in their interpretation of performance feedback.
Subjects: 
Lab experiments
Performance feedback
Strategic communication
Cheap talk
Persuasion
Multiple audiences
Lying
JEL: 
C72
C92
D23
D82
D83
M12
M54
Document Type: 
Working Paper

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